President Bush said Palestinian leader Yasser Arafat must choose peace or more violence. The Bush administration said it is waiting to see how the Palestinian Authority responds to the latest bombing in Israel.

White House spokesman Ari Fleischer said President Bush is watching Palestinian leaders to see if they are dedicated to violence or promises of peace.

Mr. Fleischer said the president wants to see "what actions the Palestinians take" to halt bomb attacks against Israeli civilians after Tuesday's violence near Tel Aviv.

Israeli Prime Minister Ariel Sharon cut short a trip to the United States following the bombing, returning home, he said, to plan retaliation. At a news conference before he left, Mr. Sharon said, "He who rises up to kill us, we will preempt and kill him first."

With Israel increasingly likely to renew its military offensive in Palestinian areas, President Bush said he will never tell Prime Minister Sharon how to "handle his business," saying, "That's his choice to make."

The bombing further complicates U.S. efforts to get Israeli and Palestinian leaders back to the negotiating table. Mr. Sharon said Mr. Arafat is an enemy. The White House said it is still willing to deal with Mr. Arafat as well as other members of the Palestinian Authority who Mr. Fleischer said are trying to find ways to bring about reforms.

Mr. Sharon and Mr. Bush failed to agree on the need for an eventual Palestinian state. They are also split over Israeli settlements in Palestinian areas.

The leaders did agree that Palestinian authorities should reform their institutions to root out corruption and increase accountability. Toward that end, CIA Director George Tenet will return to the region to help restructure Palestinian security forces.

When he does, Mr. Fleischer said it will be a good chance to find out whether Palestinian officials are taking action to fight violence.

Speaking to reporters during the president's trip to the Midwest state of Wisconsin, Mr. Fleischer said the question for Palestinians is: are their leaders dedicated to violence or will they keep their promises to work against terrorism?

He said it is time for the Palestinian Authority to perform with President Bush watching to see whether they take the opportunity to help their own people who are not engaging in violence.

President Bush continues efforts at Mideast peace-making later Wednesday with a White House meeting with Jordan's King Abdullah.